Russian Oil Firms Ask Government to Cut Oil Export Duties

Following a plunge in global prices or face lower production, small Russian oil firms have urgently called on the government to cut oil export duties by at least 30 percent.

AssoNeft, the association of small and mid-sized oil and gas companies, said in a letter that oil companies have already been exporting crude at a loss of $102 per a tonne in October.

'Taking into consideration the critical situation for independent oil companies, AssoNeft... asks the government to revise export duties for crude oil for November 2008, cutting them at least by $110 per tonne,' the letter said.

The government last month cut the oil export duty for October and November to $372.2 per tonne, down by 23 percent from the previously announced $485.5 per tonne, to support oil firms hit by weaker oil prices.

Global oil prices have been falling since July, when they reached record high levels close to $140 per barrel. They fell as much as to $67 per barrel on Thursday.

The small companies, which account for some 5 percent of the country's total crude production, said the burden of falling global oil prices is exacerbated for them by high export tariffs and taxes and the situation is unlikely to improve in November.

'At the current conditions, further cutting of already minimal costs is only possible by complete or partial halt of oil production,' they said in the letter.

Trading oil sources told Reuters that bigger oil companies, including state-controlled Rosneft, BP (nyse: BP - news - people )'s Russian venture, TNK-BP, and the fourth-largest oil producer, Surgut were likely to join the small companies' appeal.

Author: Jo Amey